She turns coffee into books so she can afford to buy more coffee. And more books.

Tag: IRS

Some of the most popular posts on this blog are about the non-US self-publisher’s headache of receiving all your royalties as opposed to having 30% of them withheld for tax reasons. We’ve long established that you can either go the long way around and apply for an ITIN, or the take the shortest route from A to B—or 70% to 100%—and apply for an EIN instead. Once you have those magic numbers, whichever ones they may be, you send a W8 form to the tax compliance department of each company you self-publish with and sit back and wait for your considerably bigger cheques.

But what’s happens to the tax that’s already been withheld? What about the 30% that’s been skimmed off each and every US-based royalty payment you’ve thus far received? How do you get your US tax back?

Up until the beginning of this year withholdings in the year to date was automatically refunded when you submitted your W8 forms, but that’s not the case anymore. And if you were as sluggish as me in applying for your ITIN or EIN, you may even have had withholdings taken in the previous year. So how do you get your money back? The long way around is to apply to the IRS—file a US tax return.

But if you have an ITIN, you’ll have already experienced the joy that is IRS forms, and the foreign language that is their instructions for filling them out. If you live in Europe, you’ll also have to contend with the fact that the IRS seemingly has no clue how long mail takes to get across the Atlantic—they love to send notices warning you to get back them in 30 days or ELSE, but those notices don’t arrive until 29 days after they mailed them.

The IRS owed me about $500 from 2010, and to be honest $500 was not worth engaging in anymore correspondence with the IRS. (Yes, that’s how annoying it is. I got an ITIN, so I was all too familiar with them. Getting the ITIN took me something like eight months.) There was no way I was doing that.

Then I heard about Taxback.com, a company that, in basic terms, helps people get tax back from countries they don’t live in anymore, or countries they never lived in but from where they’ve earned money.

Like royalties.

The company was founded by an Irishman and I’ve been dealing with the Irish office, but anyone can avail of their services from anywhere in the world, as far as I know. Everything is done via e-mail anyway so location is not an issue in that sense.

Taxback.com will be the first people to tell you that the service they offer is something you can do yourself, if you have the patience and like to fill out forms. But I don’t have any patience and I hate IRS forms, so I was more than happy to get someone else to do it.

There’s still some form-filling, but their Taxback.com‘s forms, and there’s only a couple of them. And you have someone you can call or e-mail whenever you have a question. And they’ll check everything is perfect before they get sent to the IRS and if it isn’t, they’ll fix it.

The real benefit to using their service is that if something goes wrong, they deal with it. Right about the time I should’ve been getting my refund cheque, I got a notice from the IRS saying that the ITIN I’d submitted to them wasn’t the ITIN I’d been assigned, and that I needed to submit more qualifying documents—and of course, this being the IRS and them not having a clue about mailing times between the US and Ireland, they’d given me 30 days to get the documents back of which only a couple hadn’t passed yet. But all I had to do was send TaxBack a scan of the letter and hey presto, the problem was fixed. They called the IRS on my behalf and proved to them that the mistake was in fact the fault of the IRS (they’d transposed some digits when entering the data from one of my forms), and within hours, my refund was back on track.

How much does this service cost? You’ve two options, I think: pay a flat free for them to prepare the documents and mail them yourself, or pay a percentage of your refund for them to take care of everything. I did the “take care of everything” one and personally, I thought it was worth penny. (Or cent.) They also have a no refund, no fee policy.

I e-mailed them scans of my forms in April, I think, and I received my refund a couple of weeks ago. I haven’t used them for this, but I believe that Taxback.com can also help you with ITINs, EINs and W8s.

****Update October 2014 – Read Me!****

From the Amazon KDP Tax Interview guide, October 2014:

“If you are claiming a reduced rate of withholding tax under an income tax treaty and do not have a U.S. TIN, provide your foreign (non-U.S.) income tax identification number to receive treaty benefits. This number is issued by your local tax authority or government for income tax purposes.”

That’s right, folks. Now – thanks to changes in something called FATCA (thanks Marcela of Beyond Frontiers Tax for the heads up!) – you only need the tax identification number from your own country to avail of any tax treaty benefits that may exist between your country of residence and the United States. This, for example, is an NI number in the UK and a PPS number in Ireland. This means you will know never know the horror of obtaining an ITIN or the suspicious ease of getting an EIN, but can simply go straight to Amazon KDP, Createspace, Smashwords, etc. and complete your tax interview with information you already have.

If you don’t have a tax identification number for some reason (some countries only give them to individuals who have been employed, for example), you DO need to get an ITIN or an EIN.

If you have past withholdings that you believe you are entitled to get back, you will have to file a US tax return and for this you DO need an ITIN or EIN.

I’m leaving the original post below but you don’t need it unless you’re hellbent on getting an EIN.

Thinking of leaving a new comment to add to the 700+ that are here already? WAIT A SECOND. Have you read through all the information that’s already been provided – this post, those associated with it and all the comments – or are you being lazy and hoping someone will fish out a summary for you instead? Hundreds of people have already given their time to comment helpfully on this post. Don’t be selfish and ungrateful by asking for them to give more, just because you can’t be bothered to read through it.

****** The tax interview = W8-BEN. If you can do an online tax interview, you DON’T NEED to submit a physical W8 because the WHOLE POINT of the tax interview is to generate a W8 for you that you sign electronically and submit by clicking a button. *******

A word of caution: I’ve never in my life encountered a process that is so gleefully and needlessly overcomplicated by people. It was straightforward before, now it’s downright simple. How about we all act accordingly, eh?

The original post is below but before you read on, please keep in mind that you don’t actually need it now unless you have to get an EIN and you only need to do that if you have past withholdings you want to get refunded, and if you do I’d recommend you go to a tax specialist who can act as an intermediary like TaxBack.com. Also I have no responsibility to keep this updated – this is a blog post I wrote once, not a public service – so please don’t consider it as expert help, legal advice or the most up to date information. Good luck!Continue reading →

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Back in November 2009, I paid my first visit to the Print-On-Demand website Lulu after a friend sent me a link. What’s this? I thought. Upload a PDF, make a cover and have your book for sale on Amazon.com? How easy is this!

It was easy. But then, to balance everything out, came the process of applying for an Individual Tax Identification Number, or ITIN.

For those of you not yet familiar with the, um… process, shall we say, if you don’t have a valid Social Security Number (SSN) – which you won’t have unless you live in the United States – CreateSpace, Amazon Kindle Direct Publishing and Smashwords have no choice but to withhold 30% of all your earnings or, in other words, cut every royalty cheque they send to you down by just under a third.

STOP RIGHT THERE. Before you all start whinging and moaning, THEY DON’T DO THIS FOR FUN. It’s the law, not for kicks. So if you can’t “stand all this bureaucracy” as self-publishers are always telling me, then I have a simple solution for you: DON’T SELF-PUBLISH YOUR BOOK. Don’t forget how lucky we are to be able to do this in the first place. So, has my SUPERFLUOUS USE OF CAPITALIZATION stopped your grumbling? Good. I’m glad to hear it. Let’s continue.

The good news is that if you live in Ireland, the UK or Canada, you can put a stop to this and get 100% of your earnings from those three companies because your country and the US have an agreement known as a tax treaty. (If you live in Australia, you can have this withholding cut to 5%. For other countries, read this.) But in order to do this you have to apply for and get an Individual Tax Identification Number from America’s Internal Revenue Service (IRS), and then you have to send that number to each of the three companies.

Sounds simple, right?

Excuse me a moment while I roll around on the floor laughing, would you?

Thanks. I’ll just be a sec.

It is simple, relatively speaking. The problem is that there is a chasm the size of the Grand Canyon (up to 446km/277 miles long and 29km/18 miles wide, if you were wondering) between the information provided by the likes of the IRS and the information you actually need to get the job done.

To compound this, they are pathologically pedantic when it comes to the filling in of forms and the inclusion of required documentation; my blogging friend and Nail Your Novel author Roz Morris had a form rejected because she’d written “UK” instead of “United Kingdom” in a space the size of a thumbnail.

The good news is that I have – finally, after three attempts – got an ITIN. Woo-hoo and stuff. But I couldn’t have done it without the trial and error of others, so today I’m going to tell you exactly what I did in the hope that you can get your ITIN in just the one go.

A Word of Warning

I thought this process would take about 8 weeks, total. That’s why I thought – and said, in Self-Printed – that if you were only earning $100 a month or so, there was no great panic about getting the ITIN, especially when, should you start making serious money and get one in the future, you can claim back your withholdings to date.

But now I take back all that. Apply for it right now. This second. The very moment you have a book for sale on CreateSpace or Smashwords (why not Amazon KDP? We shall get to that), get started on this process.

Why? Because I received my ITIN last Thursday, November 3rd, and I started this process eight months ago, back in March.

I strongly recommend that you read both Sally’s and Roz’s posts before you fill it out, and that you print two copies and have a practice run first.

Next, e-mail CreateSpace or Smashwords customer service and ask them for the letter you need to apply for an ITIN. The first time I did this, CreateSpace mailed me a physical letter; the second time, they sent me a PDF which I printed out. Either one is okay. Don’t ask KDP, who will tell you that a copy of their terms and condition and evidence of your book’s Amazon listing is enough, because it’s NOT. You’ll get laughed out of the IRS if you send them that. You have to have a physical letter, even if it’s just a PDF you printed out.

As for identification, we’ll get to that in a second.

To apply, you can do one of two things:

Visit your friendly neighborhood IRS agent at a US embassy

Apply by mail.

(There are some other things, like going to a third-party agent or hiring someone to do it for you, but avoid these at all costs.)

Since the nearest embassy to me is in Dublin, I decided to apply by post.

Attempt No.1

I thought I was being oh SO clever. I got my form, filled it out as per Sally’s instructions, printed out my letter from CreateSpace, got my passport notarized by a notary (you’ll find a list of them in your local phonebook; I paid €20 to get a notarized copy) and then sent the whole thing off to the address on the instructions that came with the form.

Except that’s not where the form was supposed to go.

About six weeks later, my letter gets returned with a stamp on it saying that the forwarding service from the address I sent it to has expired and so they sent it back to the sender address instead.

Oh, great.

And, FAIL. Time to try again.

Attempt No. 2

I get a new envelope, write the address I’m supposed to send it to on the front and send it off by standard mail. It’s now about the middle of May. I’m still thinking I’m oh so clever, but my cleverness has slightly less smug on it now. I figure that my application is perfect, my writing neat and my ink blue, and surely once I manage to send it to the right address, the fabled ITIN will be mine.

No such luck.

At the end of June, I get a letter from the IRS saying that my application is missing documentation. Because my notarized passport copy was notarized by someone that didn’t work for the IRS, it needed an apostille, which is basically a stamp from the government who issued the original passport that says, “This is real.” The letter said to go get that, and then send it back.

Problem is, the letter gives me 45 days to do this, and the letter was dated more than four weeks, or 30 days, before. That leaves me 15 days to get the apostille and get it back to Texas, where the IRS office is. The other problem is that my passport just expired, so I need to go get a new one. There’s a backlog at the passport office, so it takes me three more weeks to get it. Therefore, I don’t make the 45 days and my application is rejected.

(A letter confirming this arrives on September 14th, dated August 11th.)

So again, FAIL.

Attempt No. 3

Third time’s a charm, right?

This time I leave no stone unturned (or box unticked); I make sure my entire application is perfect. My W7 form is filled out correctly; my notarized passport copy has an apostille attached (I got it in my nearest consular office; you can also get it by post); my letter from CreateSpace is in there and the address on the envelope is correct.

The clock is ticking (you’ll understand why in the next section), so to help things along, I sent this application in by express post, making sure that no one has to sign for it on the other end lest I annoy any IRS agents.

I mailed it on Wednesday 7th September, and the post office said it would arrive in Texas within 5-6 working days.

Last Thursday, November 3rd, I got my ITIN in the mail. FINALLY!

Getting Your Money Back

When your ITIN arrives, crack open some champagne and by all means, even have a glass of it. But then get back to work, because you’re only half done. Now you have to submit your ITIN on a W-8BEN form to each of your US-based self-publishing services, which will probably be CreateSpace, Smashwords and Amazon KDP.

And this is why my clock is ticking: apparently, if you submit your ITIN successfully and use the W-8BEN that has an affidavit on the end, you will be refunded all the money the company has unnecessarily withheld from you so far in the current calendar year. You can see why, despite starting the process in April, I was starting to get nervous as spring turned to summer and summer turned to autumn.

Again, I used the instructions on Roz’s Nail Your Novel blog for filling out the form. Make sure you use the proper form – you want the one with the affidavit of unchanged status at the end, which you can find here. You don’t need to include anything with your letter, but you do need to put something in the “Reference” line of the W-8BEN form that will identify you to the company.

For CreateSpace, this can be your member ID which you’ll find on your member dashboard

For Amazon KDP, you can use your Publisher ID, which you’ll see on your account page

For Smashwords, put the e-mail address you used to register in the reference line.

What do you do if you’ve had money withheld before the current calendar year? Well, there is about $500 in the IRS coffers that was withheld from me in 2010. I’ve found a site called TaxBack.com that has a special service for tax refunds owing on royalties. There is a charge of course, but it’s representative of the refund. I’m going to give them a try for that $500. I’ll let you know how it goes.

I sent my W8-BEN forms off last week to CreateSpace, Amazon KDP and Smashwords. I’ll let you know how I get on with retro-refunds, and how soon I start getting 100% royalty cheques instead of just 70%.

So to recap, make sure to:

Send your application by express post that doesn’t require a signature on arrival; that’ll shave a couple of weeks off your waiting time if you’re applying by mail

Use blue ink

Don’t use abbreviations – even if there’s hardly any space

Get an apostille from your nearest consular office if you use a non-IRS notary

UPDATE #1:

I posted my three W-8BENs on Friday 4th November by express post, making sure no one had to sign for them at the other end as in all likelihood, they were headed for PO boxes. On the 16th, I received an e-mail from Amazon KDP confirming receipt of my W-8BEN.

UPDATE #2:

After investigating TaxBack.com to see if they could help me get my $500 back from 2010, I decided not to pursue it. It involves more forms than I’d ever care to see in my lifetime, and two that made me uncomfortable: one that gives the company power of attorney in my dealings with the IRS (which they need to act on my behalf) and a change of address form that would change the address the IRS have on file for me from my home to the offices of TaxBack.com (so the refund goes to them; they need to take their fee out of it before they refund me the rest). Now I know all this is above board, but I’ve only just got my ITIN after three attempts—the last thing I want to do is to change any details, such as my address, that the IRS have on file for me, only to have to change it back a few weeks or months later. That just says Future IRS-Induced Headache to me. Secondly, power of attorney? For $500? Or $500 minus their fee? Um, I don’t think so. So guess what, America? You can keep my money. God knows I owe it to you after driving on your roads with only a learner’s permit for a year…

UPDATE #3:

On Tuesday November 29th: success! A cheque from Amazon KDP with a big number on it. Hooray! All my tax withholdings refunded back to December 2010. I thought maybe they’d include it with my monthly payment but they’ve sent an entirely separate cheque. And they’ve sent it pretty quickly. No word yet from the other two (CreateSpace and Smashwords) but as KDP is by far the biggest one, I’m not bothered. And let the Christmas shopping commence!

UPDATE #4:

On Monday 5th December, CreateSpace send me this month’s cheque as per usual—except this one also contains my tax refund going back to December 2010. I have to say excluding Smashwords (and the withholding there is so small, I don’t mind doing it), once the ITIN has been received this refund process has been very quick and utterly straightforward. A nice antidote to the process of getting the ITIN in the first place!

UPDATE #5:

DISCLAIMER: I am not a tax specialist, and I have no expert knowledge of international tax law or any related issues. This post is intended to help you apply for an ITIN and submit your W-8BEN forms to the relevant parties, but it is not intended to be legal advice. I accept no responsibility or liability for the outcome of your ITIN application, W-8BEN submission or refund of tax withholdings. So there.